NASCAR CHANGES RAISE CORPORATE SPONSORS' RISK

Marketers Fuming at New Championship Restrictions

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DETROIT (AdAge.com) -- In a move that raises the financial risk for the marketers who sponsor race cars and their drivers, Nascar is instituting a new scoring system that will more tightly restrict eligibility to win
Photo: AP
Nascar's 2003 championship winner Matt Kenseth appears with his car, covered with his sponsors' logos, in Times Square in December to celebrate his triumph. The annual champion and the marketers who back him bask in intense media coverage throughout the year of their victory. Click to see full image.

the Nextel Cup Championship.

Marketers, who covet the intense media exposure that follows the winner back to Pit Road, are fuming. Some tell AdAge.com they are seriously reassessing their season-long Nascar sponsorship budgets, which can range from between $15 million and $30 million.

Start as losers
Under the new Nascar scoring and eligibility system, as many as 32 of the 42 drivers who begin the last 10 races that make up the championship round are losers even before they start their engines.

Nascar has acknowledged the apprehension among some marketers. "We're having a dialogue with our sponsors right now," a Nascar spokesman said. "Our view is that we believe there will be a significant buildup in coverage and attention in the first 26 races, and in the last 10. And whether a team's driver is in the top 10 or not, there's significantly more attention on Nascar."

The brouhaha is no small dustup. Nearly $1 billion is spent on Nascar sponsorships each year and more than 100 of the Fortune 500 companies participate in those programs. Many see the change as a potential threat to a decades-old synergy that has existed between Nascar, its corporate sponsors and drivers.

Money drying up
Drivers on some teams are already seeing some of the sponsorship money dry up. With less than two weeks to go before the season-opening Daytona 500, six of the 42 drivers were still without primary sponsors. Sirius, Harrah's Hotels and Casinos, and Friendly's restaurants have not re-upped with their drivers.

"We've made a commitment to our team for this year," said an executive for a marketer that sponsors one of the 42 Nascar drivers. "But if our guy isn't one of the 10 drivers competing for the championship, then maybe next year we do look at [sponsoring] the first 26 races and then seeing what happens."

"There's no question there's concern, and it's not just TV [coverage]," said the director of sports marketing for another marketer and team sponsor. "Sure, if your guy isn't fighting for a championship then maybe you wonder whether it was wise to take those ad buys at the end of the season. But you're also talking about print coverage, radio and the Internet.

Photo: AP
Nascar President Mike Helton, left, and CEO Brian France, right, defend the controversial new scoring system on Jan. 20.
You're talking about promotions and other activations. There's a lot to consider."

'26-10 plan'
Under a new points system for the 2004 season that is the pivot of the controversy, Nascar has implemented what many are calling the "26-10" plan. At the end of the first 26 races, the top 10 drivers and any other driver within 400 points of the leader will compete for the championship in the final 10 races of the season. All drivers can race in those final 10 events, but only the top drivers are eligible to actually win the championship.

General Electric Co.'s NBC and Time Warner's TNT share broadcast rights for the last 10 races of the Nascar season. Sam Flood, coordinating producer on Nascar telecasts for both networks, said the concerns of marketers and drivers were unfounded.

"Once the green flag drops, we're covering the story of the race itself," Mr. Flood said. "In essence, nothing has changed. If you want air time, you have to earn it by being on that lead lap."

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